THE WEEK ON WALL STREET
Overcoming a COVID-related economic growth scare, stocks moved higher amid a
week of strong corporate earnings reports. The Dow Jones Industrial Average rose
1.08%, while the Standard & Poor’s 500 gained 1.96%. The Nasdaq Composite index
soared 2.84% for the week. The MSCI EAFE index, which tracks developed overseas
stock markets, dipped 0.20%.
DELTA VARIANT HEAD FAKE
Stocks staged a broad retreat on Monday as traders worried about the adverse
economic implications of growing Delta variant infections. Economically sensitive
sectors, such as energy, financials, industrials, and materials, absorbed the brunt of
Monday’s sell-off. But the markets did a quick about face, posting four-consecutive
days of gains and leaving the three major averages with fresh record highs. The
sharp reversal may be attributable to a “buy on the dip” investor mentality, the
absence of investment alternatives to stocks in this low interest rate environment,
and massive financial liquidity. Stocks were also lifted by a healthy kick-off to the
second quarter earnings season.
STRONG START
The earnings season moved into full swing last week, and the results exceeded the
market’s high expectations. Of the 120 companies in the S&P 500 index that have
reported as of Friday, July 23, 89% of them beat the Street’s earnings-per-share
estimates by, on average, 20.6%. Financials and Consumer Discretionary sectors
provided the biggest earnings surprises (+28.9% and +24.5%, respectively), while
Materials and Utilities delivered the smallest positive surprises (+5.3% and +2.5%,
respectively). These earnings beats are leading Wall Street analysts to raise earnings
estimates for 3Q 2021 through 1Q 2022.
THE WEEK AHEAD: KEY ECONOMIC DATA
Monday: New Home Sales.
Tuesday: Consumer Confidence. Durable Goods Orders.
Wednesday: FOMC (Federal Open Market Committee) Announcement.
Thursday: GDP (Gross Domestic Product). Jobless Claims.
THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS
Monday: Tesla (TSLA), Lockheed Martin (LMT).
Tuesday: Apple, Inc. (AAPL), Microsoft Corporation (MSFT), General Electric
(GE), Advanced Micro Devices, Inc. (AMD), Visa (V), Alphabet, Inc. (GOOGL),
Starbucks Corporation (SBUX), 3M Company (MMM), United Parcel Service, Inc.
(UPS), Mondelez International (MDLZ).
Wednesday: Facebook, Inc. (FB), The Boeing Corporation (BA), Qualcomm, Inc.
(QCOM), Bristol Myers Squibb (BMY), Paypal Holdings (PYPL), Pfizer, Inc. (PFE),
McDonalds Corporation (MCD), Shopify, Inc. (SHOP), Servicenow, Inc. (NOW),
Thermo Fisher Scientific, Inc. (TMO).
Thursday: Amazon.com, Inc. (AMZN), Ford Motor Company (F), Mastercard
(MA), Twilio, Inc. (TWLO), Merck & Company (MRK), The Southern Company
(SO), Northrop Grumman (NOC), Comcast Corporation (CMCSA), AnheuserBusch
InBev (BUD), Abbvie, Inc. (ABBV).
Friday: Exxon Mobil Corporation (XOM), Caterpillar, Inc.(CAT), Chevron
Corporation (CVX), Procter & Gamble (PG), Charter Communications, Inc. (CHRT).
FINAL THOUGHTS
Just as an FYI, the National Bureau of Economic Research said last week that the
pandemic-induced recession ended in April 2020, officially lasting two months and
making it the shortest recession in U.S. history.
As you can see from above there are a great number of important companies
reporting earnings this week. Undoubtedly, most will give a good report. What the
market will be paying close attention to is their guidance for the remainder of the
year.
Stay tuned.
